Enron Loophole

I just found this and there are many other sites, articles, and reasonable editorials behind why this is a major factor in our being raped at the pump. I know two of the WOT members will disagree and simply want to blame the Democrats, and probably Bill Clinton somehow. I was wondering what the others thought.

I think there is some truth to the fact speculation has driven prices up, but I don't know if that 60% number is high or right on.

My worry about this is isn't all of this supposedly part of our free market economy system? It sucks to be paying $4.49 a gallon as I did yesterday, but I worry what would happen if we decide that the government should regulate prices when they get too high. It is that old slippery slope thing.

I blame the Dems 100% for the price of oil and gasoline. The "Enron Loophole" as it is called, has been known about for years. They need to stop running their mouths and do something. Or are there other reasons for their glacial pace.... you know like the Bill that Dodd is forcing through the Senate to bail his butt-buddy at Countrywide out.

Speculation is only effective when the supply of a commodity is volitile. Take oil for instance, every time some camel jockey threatens to blow a pipeline up or Nigeria plunges back into civil war the supply is potentially threatened thereby making the price jump.

If the oil supply from more stable countries was to increase it would have a dampening effect on price volatility. This is basic Macro Economics. Additionally, it would create jobs here in this Country, just like "Mocha Thunder" wants.

There's nothing inherently wrong with speculation, but like anything else too much can be bad for you. The problems arise when it gets out of control, witness the stock market crash of 1929, and the current credit crisis brought on by unrestrained speculation in real estate values.

If the speculators were gambling with their own money, they wouldn't be so irrational and eager to bid the price up on every little bit of news, true or false, relevant or not. It's easy to shoot for the moon with borrowed money, when you know that if you lose the government will bail you out because your firm is "too big to fail", or you can file for bankruptcy protection and walk away from your obligations. It's also interesting how an "analyst's" report that oil will hit $150 a barrel by July 4 causes the price to jump $5 a barrel in the course of an afternoon. I'd like to see that "analyst's" firm's oil futures position. Just a guess, but it's probably not small.

Oh, and the Democrats have been in control of both the executive and legislative branches all those years that the "Enron Loophole" has been known about? They need to stop running their mouths and do something? It wasn't a Democratic administration that gutted the regulatory structure, and then ignored the warnings from inside the financial industry that some really bad things were happening.

Speculation is only effective when the supply of a commodity is volitile. Take oil for instance, every time some camel jockey threatens to blow a pipeline up or Nigeria plunges back into civil war the supply is potentially threatened thereby making the price jump.

If the oil supply from more stable countries was to increase it would have a dampening effect on price volatility. This is basic Macro Economics. Additionally, it would create jobs here in this Country, just like "Mocha Thunder" wants.

So how does a 200,000 barrel a day decrease in Nigeria's output cause a bidding up of prices, while a 200,000 barrel a day increase in Saudi Arabia's output is called insignificant and not enough to move the price? In a rational world, that would be a wash.

First, the so-called "Enron Loophole" has been around for many decades. What was done in 2000 was to get a legal definition of what is commonly known as a "swap" transaction in the Commodities and Futures markets. "Swaps" had been happening for many years before Commodities Modernizeation act of 2000 legally defined the practice. A practice which there was no law for or against.

Second, you are assuming the world is rational. Speculation is like the evening news, bad news is the money maker. I guess you'd need to look into overall refining capacity levels and the margins within that capacity.

Third, no one and I mean no one would vote against some modification of the 2000 Commodities Modernization Act, just by raising the amount of equity needed to be able to speculate on commodities would cause alot of investors to abandon the practice.

Fourth, a stable supply of petro from a stable country would have a mitigating effect on the volitility of oil prices. It would also keep our money at home thereby keeping it out of the hands of terrorists.

Fifth, if we are to believe what the OPEC spokesman said the other day Dodd's Italian buddy over at Countrywide shares in the blame for high oil prices. His and other's questionable loan practices help destroy the value of the dollar.

The rational part is my old libertarian world view refusing to let go. The point is that to blame the whole mess on one party is overly simplistic at best. One can cherry-pick facts to make the argument one way or the other, but with few exceptions all hands are dirty here. I'm willing to admit that there are Democrats who are complicit, wanna give up any Republicans?

When it comes to the destruction of the dollar's value, and the subsequent effect on oil prices, I agree with you 100%. To the extent that those who engaged in questionable lending practices on an unprecedented scale, triggering the credit crunch and thereby the Fed's lowering of interest rates, yes they share the blame for creating this environment. And they should pay, but instead Countrywide gets bailed out by Bank Of America, with the government's blessing. Bear Stearns gets bailed out by JP Morgan, with the government's blessing and $2 billion of our cash.

If you or I go to Atlantic City and piss away the kids' lunch money, we're just stupid hicks and we deserve what we get. We may be prosecuted for child neglect. If we're lucky and can prove our moral worth, we'll get food stamps. Several big corporations do essentially the same thing, thousands of people lose their jobs, and taxpayer money bails the big investors out. Now that's welfare, no consequences and moral hazard all rolled into one.

The rational part is my old libertarian world view refusing to let go. The point is that to blame the whole mess on one party is overly simplistic at best. One can cherry-pick facts to make the argument one way or the other, but with few exceptions all hands are dirty here. I'm willing to admit that there are Democrats who are complicit, wanna give up any Republicans?

When it comes to the destruction of the dollar's value, and the subsequent effect on oil prices, I agree with you 100%. To the extent that those who engaged in questionable lending practices on an unprecedented scale, triggering the credit crunch and thereby the Fed's lowering of interest rates, yes they share the blame for creating this environment. And they should pay, but instead Countrywide gets bailed out by Bank Of America, with the government's blessing. Bear Stearns gets bailed out by JP Morgan, with the government's blessing and $2 billion of our cash.

If you or I go to Atlantic City and piss away the kids' lunch money, we're just stupid hicks and we deserve what we get. We may be prosecuted for child neglect. If we're lucky and can prove our moral worth, we'll get food stamps. Several big corporations do essentially the same thing, thousands of people lose their jobs, and taxpayer money bails the big investors out. Now that's welfare, no consequences and moral hazard all rolled into one.

Kinda makes you wonder who's intrest the Government has at Heart. The Exec. and Legs. that is. After yesterdays landmark decision that reaffirms all Amendments in the Bill of Rights belong to "We the People" I'm pretty sure the Jud. has our backs. Well, five of them anyways. Maybe they know something we don't....

Careful with the bolded statement, that kind of thinking can make for very long rides to CCO's with your compadre.